Summary
- Tesla’s net earnings received a $600 million boost due to Bitcoin and a new accounting rule
- The Financial Accounting Standards Board (FASB) made a policy change mandating digital asset holdings be marked to market each quarter, resulting in Tesla reporting $1.08 billion in digital assets
- Previous FASB rules allowed companies to report Bitcoin holdings at the lowest value recorded, but the new rule requires mark-to-market adjustments
- Tesla’s net income in Q4 was impacted by the FASB rule change, with a $600 million mark-to-market benefit from Bitcoin
- Tesla invested $1.5 billion in Bitcoin in 2021, sold three-quarters of its holdings in Q2 2022, and now may acquire digital assets from time to time
Article
Tesla experienced a significant $600 million boost in its net earnings due to Bitcoin and a new accounting rule related to crypto assets. During its recent earnings report, Tesla revealed that it had $1.08 billion in digital assets, a substantial increase from the $184 million reported in the previous four quarters. This increase was a result of a policy change from the Financial Accounting Standards Board (FASB), which now requires companies to mark their digital asset holdings to market each quarter.
Previously, the FASB rule allowed companies to report their Bitcoin holdings at the lowest value recorded during ownership, without needing to report subsequent price gains. Tesla’s Chief Financial Officer, Vaibhav Tenja, mentioned during the earnings call that the company’s net income in Q4 was positively impacted by the FASB rule, resulting in a $600 million mark-to-market benefit from Bitcoin due to the adoption of the new accounting standard for digital assets.
In Q3, Tesla had reported a Bitcoin holding of $184 million, but this was before the implementation of the new FASB rules. The actual value was closer to $730 million. Bitcoin has seen a significant 51 percent increase in value since President Trump’s successful election campaign in November, with the price per BTC climbing to $105,023 from $68,000 on Election Night.
Tesla first dabbled in cryptocurrency investments in 2021 when it disclosed in a 10-K filing that it had invested $1.5 billion in Bitcoin and expressed a willingness to acquire and hold digital assets on a long-term basis. In Q2 2022, the company decided to sell three-quarters of its Bitcoin holdings, converting approximately 75% of its purchases into fiat currency.
For Tesla owners looking for accessories for their vehicles, the Teslarati Marketplace offers a range of options. For questions, comments, or news tips, readers can reach out to Joey Klender via email at joey@teslarati.com, on Twitter @KlenderJoey, or by emailing tips@teslarati.com. This significant increase in net earnings for Tesla due to Bitcoin and the new accounting rule showcases the growing impact of cryptocurrencies in the financial sector and the importance of proper accounting practices.
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